This is my monthly portfolio update for the month of May 2021 (ending the reporting period at May 28th). What a rollercoaster month! On the last of these updates my portfolio was almost flat this year, at +0.53% ytd overall. About 1-2 weeks later, I was down almost 20% !
I imagine most of you were as well as most tech and growth stocks were hit hard. I deployed some extra funds and in a lucid moment decided to buy the dip, and thankfully there was a quick general recovery and I’m back in the green ytd.
I am extremely thankful for this board and the tons of knowledge from various quadrants that are shared here continuously. In the short time I’ve been here, have found out about new companies that weren’t on my radar, reinforced conviction on companies I was already holding, and also found the conviction to get rid of many others. Thanks, everyone.
CURRENT POSITION SIZES:
**Company Ticker % May % April** Crowdstrike CRWD 17.5% 22.6% CloudFlare NET 16.6% 23.5% Upstart UPST 15.0% - Snowflake SNOW 9.4% 7.9% DataDog DDOG 9.2% 7.9% Palantir PLTR 7.7% 6.6% Roku ROKU 5.8% 6.3% Fiverr FVRR 4.6% 6.4% Magnite MGNI 3.7% 6.8% EXP World H EXPI 3.6% 4.2% FulgentGenetics FLGT 3.3% 4.8% fuboTV FUBO 2.7% 1.4% ZoomInfo ZI 1.0% - LightSpeed LSPD - 1.6%
The big change from last month was the addition of Upstart Holdings (Thank you board and Saul in particular, a lot of good reading here led to the purchase) . When I bought UPST I’d already sold Lightspeed (the space they operate in is quite fragmented, and I don’t believe LSPD will be leaders), one of my smallest positions, and bought a very tiny amount of ZoomInfo shares. I’ll probably sell ZI soon as well to keep the number of positions at 12, and because after thinking about it further, I’m not really a big fan of what they do, have zero drive to build a full position for them.
So, some movement at the bottom half, while my top conviction positions remained untouched.
* Top Conviction or Tier 1 - Crowdstrike, Cloudflare, Datadog, Snowflake, Palantir, Roku.
Unless something goes horribly wrong with company performance, I expect to hold the Tier 1s for a long time and keep adding to them as I think they are executing well and some have good chances of becoming gigantic in the future. This month while they were down I’ve added more to Datadog, Palantir, Snowflake and Roku.
* Tier 2 - Magnite, Fiverr, EXP, Fulgent, fuboTV, Lightspeed
Tier 2 are companies I believe in, am happy with their results so far and happy to hold them for now, but have doubts on whether I’ll be holding past this year. No plans to add significantly at this point, although I added some more to FUBO and EXPI this month.
Reasons detailed above and below. Upstart I added with new cash, and if it had kept still it would be around the same level as Palantir, but it nearly doubled in size in no time.
COMPANY STOCK EVOLUTION YTD
For positions started this year, starting price is where I first bought it.
For companies I was already holding in December, starting price is Dec 31 Close.
**Price 05/28 Starting Growth** UPST 148.22 87.4 69.6% FLGT 74.07 52.1 42.2% NET 82.06 75.99 8.0% CRWD 222.15 211.82 4.9% ROKU 346.71 332.02 4.4% EXPI 32.26 31.56 2.2% FVRR 205.31 195.1 5.2% PLTR 22.95 23.55 -2.5% MGNI 29.7 30.71 -3.3% DDOG 91.05 98.44 -7.5% FUBO 23.74 28 -15.2% SNOW 238.03 281.4 -15.4% ZI 43.83 51.88 -15.5%
PORTFOLIO RESULTS YTD
End of Jan +24.7%
End of Feb +14,0%
End of Mar -6,9%
End of Apr +0,5%
End of May +6.23%
It looks like a good linear progression from March to May but it wasn’t at all, as you know. At a given point earlier this month I was at -20%, so there was a great general recovery here, aided by adding cash and going on a buying spree when prices were down. Also, the spectacular Upstart performance in the last few weeks was an enormous growth driver.
I’ve been consistently adding a chunk of my salary each month, and plan to keep doing so for the foreseeable future.
NOTES ON MY POSITIONS:
I’ll start by addressing the elephant in the portfolio, Upstart. There were extensive UPST threads on this board over the past 3 weeks or so, I read them all. That’s what prompted me to invest in the company, particularly Saul’s take, and a comparison from someone (I forget the author) between UPST’s model and Lemonade’s, where UPST is primarily a service provider to the banks, it doesn’t take on most of the risk, while Lemonade does. I had read about UPST before, but somehow hadn’t really grasped this bit, and also the stock price was unattractive at the time.
So looking at the posts here and the quarterly results, I decided to go all in, and in a good moment, it seems.
Throughout this week I was feeling my inexperience a lot, with constant mental debate on whether I should be trimming (was not expecting 80%+ growth in the same month I bought it!).
Notes from UPST Q1 Earnings Report:
First Quarter 2021 Financial Highlights
- Revenue. Yoy increase of 90%, $121M total revenue Q1 2021.
Total fee revenue increase yoy of 71%, $116M
* Transaction Volume and Conversion Rate. Bank partners originated 169,750 loans, totaling $1.73 billion, across our platform in the first quarter, up 102% from the same quarter of the prior year. Conversion on rate requests was 22% in the first quarter of 2021, up from 14% in the same quarter of the prior year.
Income from Operations. Income from operations was $15.6 million, from $0.6 million the prior year.
Net Income and EPS. GAAP net income was $10.1 million, up from $1.5 million in the same quarter of the prior year. Adjusted net income was $19.9 million, up from $3.4 million in the same quarter of the prior year. Accordingly, GAAP diluted earnings per share was $0.11, and diluted adjusted earnings per share was $0.22 based on the weighted-average common shares outstanding during the period.
Contribution Profit. Contribution profit was $55.8 million, up 117% from in the first quarter of 2020, with a contribution margin of 48% compared to a 38% contribution margin in the first quarter of 2020.
Adjusted EBITDA. Adjusted EBITDA was $21.0 million, up 472% year-over-year. The first quarter 2021 adjusted EBITDA margin was 17% of total revenue, from 6% in the first quarter of 2020.
Q2 2021 Guidance:
- Revenue of $150 to $160 million
- Contribution Margin of approximately 44%
- Net Income of $8 to $12 million
- Adjusted Net Income of $21 to $25 million
- Adjusted EBITDA of $23 to $27 million
- Basic Weighted-Average Share Count of approximately 77.0 million shares
- Diluted Weighted-Average Share Count of approximately 94.9 million shares
FY2021 Full Guidance Raise:
- Revenue of approximately $600 million (vs prior guidance of $500 million)
- Contribution Margin of approximately 42% (vs prior guidance of 41%)
Great results and a 20% raise to this FY’s prior guidance! Stellar stuff!
Fiverr is an Israeli company, developers of a marketplace that connects freelancers with clients.
They reported on their Q1 this month:
Revenue growth accelerating to 100% y/y
Active buyers increased 56% y/y to 3.8 million
Continued expansion in spend per buyer
Continued expansion in take rate
Launched ninth vertical, for data related services:
This quarter, we opened a new vertical on the Fiverr marketplace. The new Data Vertical is focused on data related services and gives businesses access to talent that can provide insights from data analysis and includes services such as storage solutions, data science, analysis and automations. Businesses today not only need an online presence, but a holistic digital strategy to drive their businesses forward. Investing in data science and analytics can help companies make more informed decisions, improve their operational efficiency, and ultimately increase their revenue. By opening a vertical focused solely on data services, we are providing business buyers of all sizes the ability to tap directly into talented data analysts, data scientists and more, on-demand within their specified budget.
Raised FY21 guidance: “Fiverr expects business momentum to continue and is upgrading guidance for 2021 from 46-50% to 59-63% revenue growth”
$68.3 million revenue (100% y/y growth)
3.8M active buyers (56% y/y growth)
$216 spend per buyer (22% y/y growth)
Gross Margin 83.1% GAAP / 84.1% Non-GAAP
($0.7M) Adjusted EBITDA
(1.0%) Adjusted EBITDA Margin
27.2% Take Rate (10bps y/y improvement)
$73-75M Revenue (55-59% y/y)
$5-$7M Adjusted EBITDA
$302-308M (59-63% y/y)
$19.5-$24.5M Adjusted EBITDA
We continue to expect the elevated spend level across our cohorts to sustain into the future with the potential to increase further as we deepen our strategic initiatives around Fiverr Business, Subscriptions and Milestones. As we mentioned earlier this year, existing cohorts from 2018 and older, on average grew 15% in 2020. We are so happy to see our buyers doing more with Fiverr and unlocking the power of remote work!
So, all good here, let’s move on.
Palantir’s promise is to become one of the most important software companies in the world over the next decade. Their business hangs on two main products: Gotham, for public institutions, mostly governments, where their client list features several branches of the US Government (including military/intelligence), and the UK and Japanese national health services; and Foundry, their commercial solution, where they’re working with Rio Tinto, BP, 3M, Airbus, among others.
They reported on their Q1 this month, and I like the way it’s going. Palantir keep growing their government relations, winning multimillion contracts seemingly every month. They don’t add a lot of clients, but the ones they add come in with big bucks. And there are clear signals they are working to increase their sales pace on the enterprise side (where they have just added 11 clients in 1 quarter), as they just brought in ~50 new salespeople this quarter (plan is for the hiring to go into triple digits this year) and are looking to accelerate client onboarding times.
Palantir are also still going strong on the soundbite side, my favorite from the earnings call is this insane quote involving the evil cybernetwork villain from the Terminator universe:
Rodney Nelson – Head of Investor Relations
Jeffrey T. asks, what are your plans to compete with Microsoft in the coming quarters?
Shyam Sankar – Chief Operating Officer
Thanks Jeffrey. Well, we don’t compete with Microsoft or other software vendors or system integrators. We compete against our customers. We compete against our customers’ desire to build their own bespoke solution.
This is build versus buy. And you aren’t actually buying with Microsoft or these other vendors. I mean, with Microsoft, remember Ballmer’s famous meme, developers, developers, developers, or with AWS, look at their product marketing, it’s about build, build better, build faster, build on AWS. The same for GCP and with system integrators, by definition, you’re building.
And yes, that’s a challenge because our software shamanism means that we build something radically in the future, holistic in approach and stunning in its results. But it’s also something that comes across as both heterodox to the high priest of IT and their reference architecture. But the proof is in the pudding when the pandemic hit and tore through our health systems and supply chain, the IT orthodoxes failed to deliver anything ameliorate. Foundry and Gotham delivered revolutionary capabilities in jaw droppingly short periods of time.
Our battle-tested, and I mean that literally, our battle-tested architecture is competing against DIY market. And the pace we are innovating at continues to put distance between us and the next best alternative from archetypes that allow you to replace a year of custom integration with a few clicks over a few hours to Apollo for Edge AI that allows you to deliver the most sophisticated operational AI that is frankly just a few steps shy of Skynet. And as I mentioned earlier, we see the cloud providers, in particular, starting to incorporate these battle-tested architectures into their go-to-market motion and their offerings to their customers, precisely because selling undifferentiated LEGO bots isn’t enough.
Just an example, but the call had several great moments that made me feel even better about owning them, there’s a transcript at the Fool here:
In line with the above Skynet analogy, Palantir announced last week that the US Space Force (I had no idea this was still a thing, btw) will use them to integrate data sources and power an analytics engine for users across the Space and Missile System Center (translation: another $10M contract).
I am confident Palantir are making the right moves for holding shares to prove a positive investment over the next decade. My pet peeve is the same as many investors’ , the levels of stock based compensation they exhibit. But if it guarantees they keep hiring some of the best minds in the business, fine by me right now.
Regarding their Q1 earnings report, highlights and notes:
Palantir Q1 2021 Highlights
- Total revenue grew 49% year-over-year to $341 million
- US commercial revenue grew 72% year-over-year
- US government revenue grew 83% year-over-year
- Cash flow from operations of $117 million, up $404 million year-over-year, and representing a 34% margin
- Adjusted free cash flow of $151 million, up $441 million year-over-year, and representing a 44% margin
- GAAP net loss per share, diluted of $(0.07)
- Adjusted earnings per share, diluted of $0.04
Outlook Q2 2021:
- $360 million in revenue, representing year-over-year revenue growth of 43%.
- Adjusted operating margin of 23%.
Outlook full year 2021:
- Adjusted free cash flow in excess of $150 million.
Per long-term guidance policy, as provided by our Chief Executive Officer, Alex Karp, we continue to expect: Annual revenue growth of 30% or greater for 2021 through 2025.
Government business Q1 2021
$208M revenue , up 76% yoy
(83% growth from US government customers)
Commercial business Q1 2021
$133M revenue, up 19% yoy
(72% growth from US commercial customers)
$2.8 Bn in total remaining deal value, up 40% yoy
- 15 deals worth $5M or more
- 6 deals worth $10M or more
- 3.7 years average contract duration
- 4.6 years average contract duration of commercial customers
- Added 11 new commercial customers.
- Revenue per customer up 29% yoy, $8.1M
- Avg revenue per top 20 customers up 34% yoy, $36.1M
- In Q1 2021, adjusted gross margin grew from 75 to 83%
* Contribution margin grew from 41 to 60%
Finally, just in today, more good news:
Palantir Technologies announced today it had been selected by the United States Special Operations Command (USSOCOM) to continue its work as their enterprise data management and AI-enabled mission command platform as part of the Mission Command System/Common Operational Picture program. The contract is valued at a total of $111 million, inclusive of options, with $52.5 million executed upon award. The total contract includes a base year and one option year.
FULGENT GENETICS (FLGT)
Fulgent are a genetic testing company, founded in 2011 and based out of California.
From their website: «Fulgent began with two simple ideas; flexibility and affordability. Today, we strive to create the most effective and wide ranging tests on the market.» When Covid hit that flexibility was put to the test and they passed with flying colors, rapidly developing the capacity for mass testing. Fulgent won a few contracts including New York City Dept of Education Test and Trace for Covid in 2020, renewed since for the 2021 school year.
First Quarter 2021 Results:
- Revenue grew more than 4,500% yoy, to $359.4M
- Record billable tests delivered, approx 3.8M, 290 times the volume of Q1 2020
- Gross margin improved approx 32% yoy
- NGS Revenue grew 115% year-over-year
- Record GAAP income of $200.7 million, or $6.52 per share
- Record Non-GAAP income of $202.9 million, or $6.59 per share
- Record Adjusted EBITDA of $271.9 million
- Cash from operations of $233.2 million; Cash and investments of $697.4 million as of March 31, 2021
* Raises full year total revenue outlook to $830 million from $800 million, representing growth of 97% year over year
* Raises NGS revenue outlook to $100 million from $70 million, representing growth of 174% year over year
- Expects GAAP income of approximately $12.00 per share; non-GAAP income of approximately $12.50 per share in 2021
For the second quarter of 2021, the company expects to generate revenue of approximately $200 million. For the full year 2021, the company now expects revenue of approximately $830 million, which would represent growth of 97% year over year, versus previous guidance of $800 million. The company anticipates that of this $830 million, approximately $100 million will be realized from Next Generation Sequencing (“NGS”) testing, and the remaining $730 million will be realized from non-NGS, RT-PCR based testing. The company also expects to drive strong gross and operating margins by leveraging the company’s proprietary technology platform, which would generate GAAP income of approximately $380 million, or $12.00 per share, and non-GAAP income of approximately $12.50 per share for the year.
eXp WORLD HOLDINGS (EXPI)
EXPI had a positive quarter, as evidenced by the figures below. They keep moving forward with their global expansion adding new markets almost every month.
Revenue increase of 115% to $583.8 million in Q1 2021, compared to $271.4 million same quarter last year
Gross profit increased 91% to $53.5M in Q1 2021, compared to $28M same quarter last year
Net income increased 3,348% to $4.8M Q1 2021, compared to $0.1M same quarter last year
Adjusted EBITDA increased 159% to $14.8M in Q1 2021, compared to $5.7M same quarter last yaer
Operating cash flow increased 184% to $40.6 million in the first quarter of 2021, compared to $14.3 million same quarter last year
As of March 31, 2021, cash and cash equivalents totaled $104.4 million, compared to $44.3 million as of March 31, 2020.
The Company repurchased approximately $34.0 million of common stock during the first quarter of 2021.
First Quarter 2021 Operational Highlights:
Agents and brokers on the eXp Realty platform increased 77% to 50,333 at the end of the first quarter of 2021, compared to 28,449 at the end of the first quarter of 2020.
Residential and commercial transaction sides closed increased 95% to 73,878 in the first quarter of 2021, compared to 37,882 in the same year-ago quarter.
Residential and commercial transaction volume closed increased 123% to $24.5 billion in the first quarter of 2021, compared to $11.0 billion in the same year-ago quarter.
* eXp Realty expanded into four new international locations and territories in the first quarter of 2021, including Puerto Rico, Brazil, Italy, and Hong Kong. Subsequent to the end of the first quarter, the Company successfully launched in Colombia, and announced plans to establish operations in Spain and Israel by the end of the second quarter of 2021.
- eXp Realty ended the first quarter of 2021 with a 73 global Net Promoter Score, a measure of agent satisfaction, through the Company’s intense focus on the agent experience. This compares to a 70 global Net Promoter Score at the end of the first quarter of 2020.
Lots of news about high profile cyberattacks recently, seems like the right environment for cybersecurity companies to keep thriving.
Looking forward to CRWD’s earnings report next week.
And that’s it for this month! Here’s hoping for a green Summer. Stay safe, everyone.
My Previous recaps:
April 2021 Update
March 2021 Update
February 2021 Update